Describe Wells Fargo's organizational structure before Scharf took over the bank. Then, describe the structure after he became CEO. Explain the key differences, including what impact you think the changes will have.

Management in Action C prod.reader-ui.prod.mheducation.com/epub/sn_b3da/data-uuid-6c1235f4e44e4ba1801ca6efa0917568 16 < > D Aa f Management in Action Wells Fargo's Sales Culture Fails the Company How do you sell money? This is a fundamental challenge for retail banks, and Richard Kovacevich had a solution. He saw banks as stores. bankers as salespeople, and financial instruments as consumer products. Much like a deli worker asks if you'd like to upsize that combo or add dessert to your order, a banker should encourage you to add a credit card, savings account, or loan to your portfolio. Kovacevich called it "cross-selling," and he based it on the fact that customers with several accounts are much more profitable to a bank than customers with a single account. How many accounts should a customer have? Eight, according to the "Going for Gr-Eight" initiative he launched as CEO of Norwest in 1997. Why eight? Because, Kovacevich said, "It rhymes with GREAT!"167 SALES PRACTICES AT WELLS FARGO Norwest merged with Wells Fargo in 1998; the bank retained the Wells Fargo name, and Kovacevich took the helm as president and CEO. He saw revenue growth as the bank's most important goal and cross-selling as the way to achieve it. 168 Bankers could earn between $500 and $2,000 in quarterly bonuses for hitting sales targets, and district managers could increase their annual compensation by up to $20,000. According to former Wells Fargo worker Scott Trainor, "If you could sell. you had a job." 169 The strong sales culture transformed Wells Fargo's bottom line, as evidenced by a 67% increase in the bank's stock from 2006 to 2015.170 Unfortunately, the culture had a dark side. Steven Schrodt, who worked at a Wells Fargo branch in Lincoln, Nebraska, before resigning due to severe sales pressure in 2012, remembers managers encouraging those who hadn't reached sales goals to open accounts for their family members and friends. Other former employees describe searching for potential customers at retirement homes and local bus stops. 171 Bankers who grew tired of asking friends, family, and strangers for business adopted more covert tactics. One former Wells Fargo employee recalls the day he discovered a high-performing co-worker's secret formula. A customer had applied for a home equity loan and somehow also ended up with a $20,000 personal line of credit. "So then I realized how he was doing all his loans, because he was basically tagging on other loan products in the same application so they wouldn't really notice when they signed the documents."172 Problems started to emerge in 2009. At this point, Richard Kovacevich was gone, John Stumpf was president and CEO, and * Page 356 Paused